Are the company’s shares a worthwhile investment?
The post The Webjet (ASX:WEB) share price is nearing its 52-week high. Is now the time to buy? appeared first on The Motley Fool Australia. –
The Webjet Limited (ASX: WEB) share price has taken off, almost topping its 52-week high of $6.33 achieved in March. The online agent provided investors with a trading update that indicated its business is on the mend.
At the time of writing, Webjet shares are travelling slightly lower to $5.98, down 0.5%.
What’s driving the Webjet share price higher?
Webjet revealed on 31 August that its post-pandemic strategy is delivering results, with its WebBeds business profitable since July 2021. As travel restrictions have begun to ease across North America and Europe, strong demand has followed.
The company’s OTA (online travel agency) bookings outperformed the market by 1.6 times, increasing market share despite border closures. Webjet noted it is ready to benefit from domestic-focused tourism around the world. What will this mean for Webjet shares?
As a result, the business expects to become cash-flow positive within the first half of FY22.
Supporting the company’s bottom line, its cost base is projected to be 20% lower with significant cash reserves available.
The vaccination rollouts in the United States and Europe are well advanced, with both economies reopening. The forecast for Australia and New Zealand markets are that they’ll have a positive impact in the early 2022 calendar year.
So, are Webjet shares a buy?
Is now the time to buy?
Goldman Sachs released a broker note in late August following the company’s business update to the ASX.
The multinational investment bank noted the recent update reconfirms the view of a strong recovery in the travel sector.
However, there are risks that could derail the company’s plans. They included a delay in industry recovery, increased competition in the OTA segment, and impact of innovative bedbank models.
Nonetheless, Goldman Sachs placed a buy rating on the company’s shares with a 12-month price target of $6.40. Based on the current Webjet share price, this implies an upside of around 7%.
Should you invest $1,000 in Webjet right now?
Before you consider Webjet, you’ll want to hear this.
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*Returns as of August 16th 2021
Here’s why the Webjet (ASX:WEB) share price is up 50% this last year
How have ASX travel shares performed during the August 2021 earnings season?
Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.